Knowledge and experience matters and I wanted to show you how something simple your property manager does can affect your bottom line in a huge way.
I recently took on a property that is a very nice property. If you do the market analysis correctly you get a rent amount of $1750 for the home. If you do the market analysis incorrectly you get rent value in the range of $1400. When I look in the MLS for comparables to my property I see rent values of $1450 to $1495 sprinkled into the list of properties in the $1700 to $1800 range. One house rented for $1395 and is also larger than the home I rented for $1750. So what causes this?
Not knowing how to correctly look for comparables causes this. This property is in a subdivision that is a cut above everything that surrounds it. The homes look like an architect designed them. They are not the big boxes you see everywhere. The whole neighborhood is well maintained. Yards look good, the homes all look freshly painted, it looks very nice. Inside, the home has features the surrounding subdivisions don’t have. They have solid surface counter tops, crown molding, chair rails, etc. They are very nicely finished. If a manager includes the surrounding areas in his search, (there is a couple ways to use the MLS that can cause this), he gets a skewed result not representative of what the home should rent for.
When I took on this property there was a property down the street advertised for rent in the low $1400’s. I was worried this would affect my ability to get the rent amount that I should. Having properties marketed this way can eventually affect market values. If your manager doesn’t know the neighborhood and doesn’t know how to do a market analysis correctly he can set your rent too low and possibly drive down rents as more and more comps for the area are in a lower range.
What would you rather have $1495 per month or $1750?